LPL Financial (LPLA) AI Stock Analysis

• Market Cap: $28.05B
• Dividend Yield: 0.36%
• Average Volume (3M): 869.88K
• Price to Earnings (P/E): 24.0
• Beta (1Y): 1.06
• Revenue Growth: 29.23%
• EPS Growth: 13.45%
• Country: US
• Employees: 9,118
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Capital Markets
• EPS (TTM): 4.51
• Shares Outstanding: 80,004,105
• 10 Day Avg. Volume: 965,873
• 30 Day Avg. Volume: 869,883
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 2.26
• Enterprise Value/Gross Profit: 3.62
• Enterprise Value/Ebitda: 12.81
• 1Y Price Target: $437.20
• Price Target Upside: 29.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 65 Neutral
• Price Target: $358.00 ▲(6.33% Upside)

LPL Financial's overall stock score reflects strong financial performance and strategic growth initiatives, particularly the acquisition of Commonwealth Financial Network. However, technical indicators suggest bearish momentum, and valuation metrics indicate potential overvaluation. The company's robust earnings call performance and strategic acquisitions are significant positives, but cash flow challenges and market conditions pose risks.

Positive Factors

Revenue Growth

Consistent revenue growth and improved cost management demonstrate LPL Financial's ability to expand its market reach and enhance profitability, indicating a strong business model and competitive positioning in the financial services industry.

Strategic Acquisition

The acquisition of Commonwealth Financial Network enhances LPL's service offerings and market position, integrating Commonwealth's premium service culture and expanding LPL's advisor network, which is crucial for long-term growth and competitive advantage.

Asset Growth

Record asset growth reflects LPL Financial's successful client acquisition and retention strategies, strengthening its market position and providing a solid foundation for future revenue generation and profitability.

Negative Factors

Cash Flow Challenges

Declining free cash flow growth indicates potential liquidity issues, which could limit LPL Financial's ability to invest in growth opportunities and maintain financial flexibility, posing a risk to long-term stability.

Regulatory Ambiguity

Regulatory uncertainty can hinder strategic initiatives, affecting LPL Financial's ability to attract independent RIAs, which are crucial for expanding its advisory network and sustaining growth in the competitive financial services sector.

Decline in Net Profit Margin

A decline in net profit margin suggests rising expenses or financial pressures, which could impact LPL Financial's profitability and limit its ability to reinvest in business expansion, affecting long-term growth prospects.

LPL Financial Business Overview & Revenue Model

Company Description

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market programs; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

How the Company Makes Money

LPL Financial generates revenue primarily through several key streams: advisory fees, commission revenue, and asset management fees. The company charges fees for its advisory services, which are based on the assets under management (AUM) and are typically a percentage of the investments managed. Additionally, LPL earns commissions from the sale of investment products, such as mutual funds and insurance, when financial advisors facilitate transactions on behalf of their clients. The firm also generates income from its technology and operational services provided to advisors, as well as from interest on cash balances held in client accounts. Significant partnerships with product providers and a growing advisor network further enhance LPL's revenue potential, as they expand the range of investment options available to advisors and increase overall client engagement.

LPL Financial Financial Statement Overview

Summary

LPL Financial shows strong revenue growth and improved cost management, with a high gross profit margin. However, the decline in net profit margin and cash flow performance, particularly the significant drop in free cash flow growth, are concerns. The balance sheet indicates reduced leverage but a decline in return on equity.

Income Statement

LPL Financial has demonstrated consistent revenue growth, with a TTM revenue growth rate of 6.83%. The gross profit margin has improved significantly to 62.50% in the TTM period, indicating strong cost management. However, the net profit margin has decreased slightly to 7.91%, suggesting rising expenses or other financial pressures. Overall, the company shows a solid performance in revenue generation and profitability, though there is room for improvement in net profit margins.

Balance Sheet

The company's debt-to-equity ratio has improved to 1.45 in the TTM period, indicating a reduction in leverage compared to previous years. However, the return on equity has decreased to 32.17%, which, while still strong, reflects a decline from previous periods. The equity ratio stands at 29.03%, suggesting a moderate level of financial stability. Overall, the balance sheet shows a positive trend in reducing leverage, but the decline in ROE is a concern.

Cash Flow

LPL Financial's cash flow performance is mixed, with a significant decline in free cash flow growth rate to -98.55% in the TTM period. The operating cash flow to net income ratio is relatively low at 0.16, indicating potential challenges in converting earnings into cash. The free cash flow to net income ratio is negative, reflecting cash flow constraints. While the company has shown strong operating cash flow in the past, recent trends suggest potential liquidity issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	14.13B	12.39B	10.05B	8.60B	7.72B	5.87B
Gross Profit	8.83B	3.37B	3.05B	2.37B	7.62B	5.77B
EBITDA	2.50B	2.11B	1.99B	1.53B	1.04B	908.93M
Net Income	1.12B	1.06B	1.07B	845.70M	459.87M	472.64M
Balance Sheet
Total Assets	17.47B	13.32B	10.39B	9.48B	7.99B	6.60B
Cash, Cash Equivalents and Short-Term Investments	4.31B	1.01B	541.76M	884.28M	514.92M	818.36M
Total Debt	7.34B	5.75B	3.96B	2.95B	3.05B	2.59B
Total Liabilities	12.40B	10.39B	8.31B	7.31B	6.32B	5.28B
Stockholders Equity	5.07B	2.93B	2.08B	2.17B	1.67B	1.31B
Cash Flow
Free Cash Flow	-5.38M	-284.94M	109.33M	1.64B	237.15M	634.41M
Operating Cash Flow	563.67M	277.59M	512.61M	1.95B	453.13M	789.94M
Investing Cash Flow	-1.67B	-1.59B	-860.19M	-376.40M	-458.64M	-187.50M
Financing Cash Flow	4.06B	1.42B	-208.53M	-504.27M	278.84M	-275.19M

LPL Financial Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 336.68
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPLA, the sentiment is Negative. The current price of 336.68 is below the 20-day moving average (MA) of 353.89, below the 50-day MA of 366.94, and below the 200-day MA of 350.94, indicating a bearish trend. The MACD of -7.04 indicates Positive momentum. The RSI at 37.34 is Neutral, neither overbought nor oversold. The STOCH value of 45.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LPLA.

LPL Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IBKR	78 Outperform	$28.36B	33.41	19.15%	0.80%	12.30%	20.76%
SF	77 Outperform	$11.78B	22.29	11.11%	1.56%	8.76%	10.32%
RJF	75 Outperform	$33.55B	16.51	18.16%	1.16%	9.42%	14.86%
TW	73 Outperform	$27.88B	45.45	9.51%	0.39%	27.97%	28.39%
SCHW	68 Neutral	$169.80B	25.18	15.59%	1.15%	4.64%	54.26%
Sector *	68 Neutral	$18.00B	11.42	9.93%	3.81%	9.73%	1.22%
LPLA	65 Neutral	$28.05B	23.98	29.46%	0.36%	29.23%	13.45%

LPL Financial Corporate Events

LPL Financial Completes Acquisition of Commonwealth Financial

On August 1, 2025, LPL Financial Holdings Inc. completed its acquisition of Commonwealth Financial Network, a wealth management firm with around 3,000 advisors managing $305 billion in assets. This acquisition, initially announced on March 31, 2025, is expected to enhance LPL’s service offerings and market position by integrating Commonwealth’s premium service culture and award-winning advisor experience. Commonwealth will continue to operate as a wholly-owned portfolio company, with its CEO Wayne Bloom joining LPL’s management committee. The onboarding of Commonwealth advisors to LPL’s platform is anticipated to be completed by the fourth quarter of 2026.

LPL Financial Signs Consulting Agreement with Althea Brown

On May 3, 2025, Althea Brown resigned as the Chief Legal Officer and Corporate Secretary of LPL Financial Holdings Inc. Subsequently, on July 2, 2025, the company entered into a Consulting Agreement with her to assist in the transition of her responsibilities until September 20, 2025. The agreement waives her obligation to repay approximately $270,000 related to her sign-on bonus and relocation expenses, and allows her restricted stock units to continue vesting. This move ensures a smooth transition and maintains stability within the company’s legal operations.